back in the new york groove ♪ live from new york where business never sleeps this is "squawk box." good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kerr nan and and kernan and andrew ross-sorkin. take a look at the stunning aerial views we've seen. we have some video of frozen niagara falls. even florida is bracing for record lows. and in kentucky last night it was colder than antarctica. we will have a live report from our friends at the weather channel in a bit. first, things are heating up for the bulls on wall street. joe mentioned the nasdaq's big run back to 5,000. andpple a huge part of the story. shares rising more than 60% in the last 12 months. as are for the broader markets, the s&p right now is right around break even for the holiday shortened week. the index is trying for its third straight week of gains.

we'll see what happens as we get closer to the opening bell. >> three big stories we're watching this morning. eu finance ministers are meeting in brussels in just a couple hours from now discussing greece's request for a six is-month loan extension. michelle will join us in a minute. also in corporate news this morning, deere will post quarterly results before the bell. earlier this week we learned berkshire hathaway bought a stake in the company. in political news the nation's current and former governors are going to be gathering in washington today for an annual meeting also taking part in the conversation administrative and legislative officials along with business and academic leaders. here are some of the stocks we're watching. intuit posted a stronger than expected loss, strong demand for its turbo tax. tax season. >> hurry up. the clock is tick inging.

>> sneaks up on you. nordstrom's earnings falling short of estimates. the company says margins fell as it worked to clear inventories and used deeper discounts to do that. the retailer's quarterly same store sales did beat forecast ss and shares of noodles getting slammed. the casual restaurant chain posting disappointing quarterly results and warning its full-year earnings will miss the mark. it was a mixed quarter though, for marvell technology. the other is marvel. marvell earnings -- >> disney. >> the earnings revenues did beat expectations. the company, though issued weak first quarter guidance. >> let's check on the markets this morning. joe was talking about what's been happening with the nasdaq. take a look. yesterday the nasdaq was higher. you saw the s&p and the dow closed down. in fact, though, the s&p and the russell 2000 both hit highs. you look this morning there are

some modest advances. looks like the s&p futures are up by just over a point. dow futures up 15 points. the nasdaq higher by another ten points. in europe and some of the early trade you'll see at least at this point it looks like, well, things are relatively flat. ftse is higher by a quarter after percent. the dax is slightly weaker and in greece things have barely budged either, up by half a percent. in asia overnight you saw the nikkei was higher by about 67 points. australia the market there down by 22 points. if you want to check out oil prices yesterday crude oil fell once again down another 2%. it slashed its losses at the end of the day. down another 15 cents at 51.01 for wti. let's check out the ten year note. you'll see at least at this point it looks like it's yielding back above 2%. if you take a look at what's been happening with the currency markets, right now the dollar is higher against the euro. the dollar is down against the

yen. gold prices at least at this point yesterday when we looked at this point were up $17. this morning down by about $3.70. still sitting above $1,200 at $1,2 03.909 an ounce. back to greece. michelle caruso cabrera joins us on the set. >> here we go again. the greeks finally caved in and requested an extension for a bailout. the greeks insisted they did not request an extension for a bailout. they insist they wanted a master loan agreement. suffice it to say everybody else in europe says they requested an extension for the bailout, and that is critical. that is the only reason we have european finance ministers gathering once again today in brussels, the third time in two weeks, to actually discuss whether or not they're going to do a new bailout arrangement for greece. so there's been a lot of fighting over the technical wording, but they're going to have to get down to the substance as well. we have seen resistance from

german. the official letter the germans feel has too much wiggle room for them not to have conditionality imposed on them in order to get what inevitably will have to be more money based on what they want. they've also gotten -- there's a lot of focus that germany is against this. the other eastern european countries are also very upset about this. slovakia in particular essential ly saying, look, we are a very poor country and we're supposed to be giving more money to greece. you want extensions on your maturities? the prime minister of slovakia said yesterday i cannot go back to my citizens and tell them that greece or the minimum wage is twice as high as in slovakia and tell them we must give mormonmore money for greek wages, et cetera. it will be contentious today. it's not clear they'll get enough done today. maybe it has to be extended to next week. the time line, 7:30 new york time, eastern standard time is when we'll see all the finance ministers arrive in brussels. the traditional parade that we often see on cnbc europe if

you're there for all these meetings. we don't often show them here in the united states. maybe we will today depending on who says what. they talk to the huge crowd of reportings. the meeting officially starts at 9:00 a.m. eastern time and when does it end? who knows? the first one they did went seven hours. they thought they had something. at the very last minute the graex walked out. the second went 40 minutes max and they left all in a huff as well. what happens today is anybody's guess. the reason today is critical is the following. the bailout officially expires on the 28th between today and that time period these finance ministers have to bring whatever deal they've got to their parliaments and vote and that takes time. how long does it take a vote to get through the u.s. congress, right? think about it. you have to do this. there's a lot of process involved. that's why today it's critical. it's also critical because for greece the situation is fiscally ominous because they're not

bringing in enough tax rech nouse and in terms of their bank banking system so many people are taking money out. there are predictions if they don't get something solid out today you could see capital controls in greece. that means you can't transfer money. you can't take money out of your bank account in greece because they would be running out of physical cash at this point. >> wow. so things could get quite a bit hairier from here. >> yes. to re-emphasize the point andrew made the other day, most of the debt greece owes -- worst case scenario they leave the eurozone, there's like $30 billion roughly held in the private sector. >> maybe not a huge impact on the markets yet. but what happened to the ecb beyond that poses questions. >> exactly. and there are still concerns if greece leaves the italian finance mince it ter says if we allow that to happen then we can no longer say the euro is irreversible and that's a deep psychological change he is yid

about. >> wah-wah -- i'm waiting. there are beautiful places. >> you're waiting for the prices. >> i'm wait to go buy those for half of what it costs right now. how long -- should i wait for a place in portugal if i like that? >> what do you like better? santorini is gorgeous. >> it probably will cause the others but i like rhodes too. >> the other issue you face in greece, if you want to get a renovation done, the bur okay 's -- >> i'm not going to buy a fixer upper. >> turn key. but i want to use drachma. >> if/when they leave. >> the inevitability of the euro -- you just said that. it's being questioned. >> does it go back to the drachma? >> you can call it what you want. >> you need to go to some please for some warm weather. you can hear it in may throat.

>> yeah, i'm sorry. it's like frog is in my throat. >> becky, stay there. lean forward, god almighty. i keep drinking the hot water. on your birthday too, yesterday. >> they could just print euro denominated ious. >> we'll know soon enough. let's talk to some people that are sitting here. thanks, michelle. the battle wages on in europe. the markets, the equity markets here hitting new milestones. investors are shrugging it off. alec young, investment strategist at oppenheimer funds and from bks management a cnbc strategist. we rushed you in like a police escort when the swiss let -- nothing has really happened. it all happened quickly. oil came down quickly and then

we saw these currency moves. and now we've been at new levels without a lot of volatility. is this the calm before the storm? is it going to start again? >> the storm only happens if as michelle said italy goes on the plate. i think everybody is making the same point -- >> now wait a minute. you said spain and portugal. do i have a shot at buying something in italy? wait, i won't go greece then. off the coast. >> i still think it's beautiful. you'll never get as good a bargain. >> no you won't. it's that much nicer. >> the euro has clearly found from a financial point of view the bottom at $110. there's value over here. i think the biggest point here everybody is making this is not an economic issue. it is a political one. economically greece is nothing. 2% of the gdpf. it spins out economic cannily it wouldn't have any kind of impact. politically that's the thing. euro is a political construct as an economic one.

if you do have a seed of doubt that this is a reversible idea you have open gate for spectators to come in and try to push spanish debt, portuguese debt italian debt. they're managing it but it's not like they have their finances. >> it's not happening yet. it's not happening yet. >> none of it will happen because speculators don't have a green light to short the stuff. they feel the ecb is controlling it. if they feel there's a fracture it gives them an opening to want to break it up even further, that's where you have the danger and that's are where the montory authorities and the fiscal authorities are worried about making sure there's political unity here that it's a fortress. once one chink of the armor goes, the fortress becomes much weaker for everyone else. >> so alec i'm talk inging about what we're going to see year over year for the s&p now on earnings given let's say 110 really is the boughtttom for the

euro. will we have positive year over year growth in the s&p with oil where it is and with the dollar where it is? >> yeah. if we assume stability in the dollar -- >> so right where we are right now what can we do, 5%? >> yeah. i think the consensus is below that but companies will had manage the numbers to a level they can beat. early in the year at this point given the numbers coming down we can add a little back in and that would give you five. valuation 17 times, you can get a modest up year for stocks. i think what happens with the energy decline, the analysts will cut the energy sector quickly, earnings and energy are down 60% for this year. they're expected to be. it takes longer for them to revise up areas that benefit like retail. discretionary. we think there could be an upward bias in earnings estimates as we move through the year if oil is bottom. and similarly if in fact the dollar has peaked you can see a similar impact coming from forex

forex. it's easier to make a case the oil is bottoming than the dollar is bottoming. short term the dollar looks overbought. on an intermediate to long-term view it's hard to argue the dollar will not continue to do pretty well. >> i'm surprised that ideologically both "the new york times" and "wall street journal" are almost on the same page. with what caused walmart to take that action yesterday. there's a lot of people on the left that would like to say that political fresh europe or whatever -- >> the cover of "usa today" said actually. >> and so did the "ft." they were shamed in a doing it. both "the journal" and "the new york times" indicates there's competition for these workers and that walmart is going to be the one that can attract the low page workers. this is the way it's supposed to happen. that companies in a capitalist system will pay the minimum that they can pay to get productivity and to retain workers. once it becomes impossible to retain the people that they

want, then wages go up in a tighter market. >> i think that's upbeat positive way of looking at it makes sense. the other thing to keep in mind, your question on earnings, is that obviously wage growth is the biggest margin driver for corporate america. it's the biggest piece of the pie if that's the beginning of the trend and we see a little bit of wage growth this year, 2%, 2.5%, productivity will rebound this year that will keep margins high. also we're seeing an increase in foreign production. even if we get wage growth margins may not rise for the s&p 500 but they can stay steady because companies are doing more producing overseas and we should see an upparticular in productivity. >> it's not just walmart. et aetna and other companies have done the same thing. >> the walmart was the most interesting as far as the dollar goes because it is a trend set trendsetter, the new union wage. and it means everyone else will have to raise wages. that's positive for the dollar.

>> it's still below the average retail -- >> it is below. >> you think i'm a communist but i think we should all be at $15. >> i wish up made $15 an hour. the fact they're moving up means the fed is more likely to consider consider normalization. this is the only thing holding the fed back from normalization. >> june or september now? >> i think it's really stretching it to believe june. in the next week will be the key thing will be yellin and what she says. >> she was onboard with june and then the next thing you know two days later. >> they're back tracking. i think realistically if they say september, if they give a guidance for september that will be enough for the market. >> it's still just february and they say they're data dependent. i think there are a the lot of numbers they're watching. >> the first rate hike timing is huge for the currency markets,

for the equity markets, our message is basically, sure they probably move some time this year. who knows when? it's like a ping-pong ball trying to follow the consensus on the first hike. we think it's a very gradual process. we think we're in a low for long environment. this is basically we're at trend growth that 5% q-3 was an anomaly, not the beginning of a major -- people are worried once they start raising historically they do a rate hike every meeting. we don't think that's what we're in for. we don't think it's as big a negative as the consensus believes. >> gentlemen, thank you. alec and boris in studio with us, thanks. coming up, how one can company is using google glass. we thought google glass was failing. they're saving lives. we'll tell but that story next. how cold is it today? this picture says it all. it is so frigid in western new york that this fountain at a state park is being called an ice volcano. we'll have a live report from our friends at the weather channel when "squawk box"

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which u.s. airline offers wi-fi on almost all of its flights? virgin america. welcome back to "squawk box," everybody. the buzz topic of the day from florida to maine record cold temperatures. the weather channel's maria rosa, we've heard parts of the country are colder than and the ashgrc at this ka today. >> reporter: i believe it. i absolutely believe it. we're along iconic broadway quiet now. business wise it has been brutal because of the cold and the ice. this is what businesses are contending with. we're on top of rock bottom brewery and we cut this off the floor here. the ice that is still very much around, there are a lot of businesses that were just getting some of those deliveries that they had to stop monday tuesday and wednesday. yesterday all trying to get ready for the weekend back up in business. the weather will not cooperate. by tonight another round of

snow. by midnight another round of freezing rain. we do have an ice storm warning in effect for nashville and around tennessee for a possibility of another quarter inch to half an inch of ice which means also another round of possible power outages. after that the temperatures get above freezing. we're talking into the lower 40s. it's coming along with rain and there may be localized flooding. another thing to have to deal with here in middle tennessee. so for a city like nashville in the deep freeze the problems with the weather continue not just today with the cold but that wintry weather that starts up again as early as midday today. back to you. >> thank you, maria. and in an emergency seconds can save lives. an ambulance company has found a way to bring doctors with them as they transport parents to the hospital. nbc's charlie wojciechowski this morning. >> reporter: a simulated run aboard a medical express ambulance equipped with google glass. >> i have a pulse of about 72

regular. are you seeing that, doctor? everything okay? >> reporter: fg the paramedics see, a doctor can see on a tablet like this one. >> we picked up our cell phones to tell them what's happening. now we can send them real time live streaming video. >> reporter: the ambulance has to become a high-powered mobile hot spot with computers and cellular equipment tucked behind the front seat. >> we are seeing the patient's face and this is what the doctor is able to see on his end. and he's able to actually zoom. >> reporter: so what he sees is determined by what you're looking at correct? >> correct. >> reporter: and enabling a better diagnosis will mean better outcomes for patients. >> it can help diagnose things and minutes can be brain cells, heart cells, time is everything. >> reporter: right now the system is just set up to transmit video, but google glass has the ability to pump an image into a small screen on the glass device. that means patient e can kg or other information could be displayed for the paramedic right onboard the ambulance.

connecting all the equipment inside the ambulance will be phase two of the project for medics. >> while i can keep maintaining with my patient i can look in the corner of my eye and seeing all the visuals without taking my eye off him. >> the company said it was going back to the drawing board with the product. hadn't really received the -- well, received a lot of attention, the traction the success people thought. to see it being used in this context. >> good to see it used in this particular context. what's creepy is when people are walking around on the street videotaping everything. i can understand it in certain applications. it makes more sense is then. >> there you have it. joe? coming up, could this finally be the death of the cd? why one well-known retailer is pulling the plug on that media product. first, though as we head to break a look at yesterday's s&p 500 winners and losers.

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youtube will be launching a special app just for kids for the first time. >> what does that mean? >> it will have two things. one, it will have buttons. >> mostly for kids now. >> no, no, no here is the thing. i don't know if you had your kids play on youtube, and you saw my kids yesterday, they can look for snow white but but then there are these videos next to snow white and like a rabbit hole. by the time you're three he things down it's like porn. this will keep it very, very safe. >> it's going to be safe, that's good. occasionally if you're showing spider-man things they get to more and more violent spider-man things. >> to weird porn, it turns in a a whole crazy thing. and max doesn't even know how to type but knows how to use siri. he says google snow white cartoons. and literally then the snow white cartoon comes up and the first cartoon is fine but the

third cartoon of snow white is like snow white gets naked. it's very complicated. >> so snow white -- >> new ideas for you, joe? >> never connected her to porn but i see there's some potential there. >> the folks at disney a business opportunity. >> i would not want her -- i'll tell you the other day i saw something pretty amazing about youtube and i never knew you this. it comes on our big tv now. we get it on our big tv. i don't know whether you went to the cutout exhibit. these are just some of the things i do. i was on coming back from davos and there was nothing to watch. i looked at a documentary. it was amazing on these cutouts, so we decided to go. before we came we wanted to show the kids the documentary on these cutouts and the latter part of life. you can go and find it and then -- it's amazing.

there are like 30 things on the matiste cutout on youtube and it goes to each one, when one fen ishs, it goes to the next one. youtube is pretty cool. >> youtube is amazing. >> this is like two weeks ago. but i have not seen the snow white leading to porn. >> it concerns me because the spider-man stuff gets more violent. >> is there porn on youtube? >> inappropriate material or gets violent. >> it's the spider-man thing bothers me because spider-man killing people. >> it's not really good porn is what you're saying. >> they don't have real porn but you know what i mean. yeah. >> i'm with you. >> so we're in favor of this. >> we are in favor of this. >> i want to tell you about starbucks because i heard the headline this morning that starbucks was going to stop selling cds and my first thought was they're trying to limit it. if you read deeper it's because they don't think cds are

relevant anymore. they plan to still stay in the music business which means you'll be finding some way to download. >> they said that the retail music experience will continue. i want to be educated on this. that's why i picked this one. >> you did, too? >> that's why it said joe and becky. becky and joe on starbucks. >> i didn't realize. >> they're going to continue to be a content -- they're going to find artists that are right for us still, which is what they've been doing. i don't know. but they're not going to do it, it's not relevant in that format anymore. >> it made me field old immediately hearing. >> i don't understand. how would they do it, andrew? >> you can download. >> how would they offer downloads -- they would say we're offering downloads? >> every store has wi-fi usually through t-mobile. right now what would happen if you walked in and somehow on your screen popped up would you like to download this song? >> you just hit it. >> and it would cost money to download it.

>> my guess is they're not going to give it up. look, i've bought cds at starbucks. i've walked in the store and bought them before. they're pretty good at picking good music. >> howard schultz once and i said that i had never known that i would ever utter the words a 2% venty no foam latte with some cinnamon on top. i never knew that i'd say that. what even is that? >> you love saying it now. >> and throw in a $4 scone and an $8 cd and then they ring it up i wanted a cup of coffee and it's going to be $23, sir. that was starbucks. that's the way they did it and cds was part of the whole -- >> it sounds to me like they are not giving up on the rech knew stream. they still want to play in the business. it was funny because my first reaction hearing all these headlines about mcdonald's, they must be finding a way to cut down on the number of offerings. this is a story about the cd. >> made a lot of money off music. >> probably not but they're not getting out of the music business. >> when is the last time you bought a cd? >> christmas a year ago.

>> okay. >> just howling in my ear for the enl tire -- >> we have all these pieces of technology. >> howling. >> it makes for better more interesting read. >> it makes it real easy to do this. when we come back we'll take a look ahead to the oscars. likely winners and losers plus auction results are in. find out what someone paid for warren buffett's cadillac and another person handed over for a controversial guitar. as we head to break here is a look back at this date in history. what does it mean to have an unlimited mileage warranty on a certified pre-owned mercedes-benz? what does it mean to drive as far as you want... for up to three years...

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welcome back to "squawk box." the red carpet is ready for the oscars. even if it doesn't come in the form of a statue, the annual oscar nominees gift bag, the swag bag, will be stuffed with more than 80 gifts worth a record $167,000. that's $17,000 more than the previous record and, yes unfortunately for them they do have to pay taxes. >> what is in that bag? >> we have a guest. >> you've never won it? >> you have to be a wintory get that bag. that's for the winner. >> i'm sorry, that's right. >> i was not at the oscars. >> you were a golden globes win winner, up for nine. >> the emmys. >> how many? >> we were up for a lot. didn't get the big egg.

the big goose. so who will be the win they are year, though? names like julianne moore, michael keaton, bradley cooper. some predictions, variety's senior film reporter and will talk to us about the business implications for what happens to these films afterwards. so let's go through the list. best film? >> yeah, every year they say it's a really close race and sometimes they're exaggerating. this year i think it's pretty accurate. you've got birdman and boy hood and american sniper all in the hunt for best picture. at this point it looks like it's probably going to be birdman but has gotten the guild awards. golden globe is probably going to be birdman, i would say. >> neither of those have done as well in the box office as

"american sniper." >> no. "american sniper" is a huge box office juggernaut. the film is probably the highest grossing best picture nominee since 2010 "toy story 3." most movies didn't make much of a stir at the box office. >> what happens to them afterwards? >> most of them have played out in ancillary sales, dvds, remember those kinds of things. >> if you decide to make it and nothing happens except the guy gets, you know these weird haircuts and no conversations are ever resolved. no plots ever -- nothing ever

happens. >> i think we'll disagree about the artistic merit. >> this show has been on for 20 years and we're going to have a big celebration in august. we can go back and find pictures of me from 20 years ago and slowly show how age cares. >> nothing gets resolved in life either. >> nothing happened. mindless mindless. mind numbing, boring, mundane conversations that go nowhere. >> critics see all naked people wearing armani suits. i tried very hard. i was looking at patricia arquette and i was confused. at the beginning wow, she really looks good. and then i figured it out and she turned into the patricia arquette by the end of the -- which makes sense.

so you liked it? >> i thought it was pretty great. >> this reminds me of elaine and the english patient. enough with the english patient. what about whiplash? >> it was great. it's underseen. it's made $10 million. a fan tastastic movie. >> movie of the year, though. >> i don't think so either. j.k. simmons is a lock. >> supporting right? he was almost lead actor there. >> what does it mean for actors? >> they're looking at their prices going up particularly for somebody like eddie who mau win best actor. that will have his value shoot up. a lot of great directors who are asking to work with you. i'm not sure it means as much as it once did. part of that is the value of

movie stars isn't is what it once was. you have comic book movies. big special effects movies. they're not as star dependent. you're not going to get that big payday that you would have 10 12 years ago. >> i think they're going to split. >> meaning director bird man? >> i think richard linkletter for buyhood. >> it did take 12 years. >> and again given the rest to "bird man." >> best picture will probably go to "bird man." >> "american sniper" doesn't get it? >> the controversy helped -- there's a lot of controversy whether it was lionizing this fellow who shouldn't have been or what not. i think that helped it at the

box office. i think it's going to hurt it. >> what's the silent black and white movie that won? >> "the artist." >> yes. and i think art is the operative term there, is it not? did you see it? >> i did. >> i still haven't seen it. did did you see it sorkin? >> i did not love the picture. i didn't think that was a great movie. >> yeah, but for the art. like for the art we're talking about now. >> okay. there we have it. >> thanks for having me. >> appreciate it. >> we'd like to update you on a story we told but last week. warren buffett's personal 2006 cadillac dts fetching $122,000. it has the option of personally picking up the keys from buffett him seven in omaha. coming up -- >> that's a lot of money -- >> for a 2006 caddie? >> how many miles did he put on the thing?

>> i'm not sure. >> anyway, coming up, just when you think that the company can't get any bigger, have you checked out the market cap of apple lately? shares soaring more than 60% in the last 12 months. we're not at 800 yet, are we? we went over 700. i think we went over 700. i'll have the inside line on the company and the catalyst for that stock next. know that chasing performance can mean lower returns and fewer choices in retirement. know that proper allocation could help increase returns so you can enjoy that second home sooner. know the right financial planning can help you save for college and retirement. know where you stand with pnc total insight. a new investing and banking experience

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welcome back to "squawk box" this morning. treat yourself to some extra eggs this morning. a government health panel has changed the way it thinks about cholesterol. >> beautiful. >> they no longer recommend people limit their intake of dietary cholesterol. it does not always impact cholesterol circulating in our bloodstream. experts suggest cutting back on refined grains and processed meat, so bacon and sausage remain on the no-no list. >> for now. >> you but eggs are good. >> red meat doesn't cause heart disease or cancer anymore. >> can we agree carbs are bad? >> for now. >> carbs are bad always. >> they lead to potentially diabetes. >> and eggs were bad because they lead to high cholesterol although it's mostly genetic and you get rid of what you don't need. do they continue their ban on eggs now or bring them back now?

they didn't ban eggs? >> cigarettes. >> cigarettes twinkies -- >> you don't like cigarettes either. >> you can buy alcohol at cvs. >> no they don't. >> certain places. they sell booze, alcohol. yeah. they're fine with those revenues revenues. anyway, a notable auction to tell you about. colts owner jim irsay winning the bid for a les paul guitar. he paid less than $35,000. his collection already includes jerry's guitar jerry garcia and i don't know what -- i guess is this one les paul himself may have used? les paul there are people that this has become almost a cult industry in buying some of this gentleman's guitars over the years. that's a nice one. $35,000. let's tell you about walmart. walmart's chief executive joined "squawk alley" yesterday and talked about the future of

mobile payments and the possibility of adopting apple pay. >> we're still looking at it and we have ongoing discussions related to it. there were some things in the first wave that made it made it more difficult for us. i wouldn't rule it out. wouldn't surprise me at some point in the not too distant future if these cash registers go away or change dramatically. i think mobile payment is definitely a fact and we're excited about that actually in figuring ways to use our own app, ways to partner with other people who customers can save time and be more efficient. >> apple pay accounts for two-thirds of mobile payments in the united states. let's talk all things apple with will power. he is a senior analyst at robert w. baird. thanks for being here today. >> good morning. good to be in the relatively balmy dallas. >> yeah. you're not missing much here when it comes to the cold temperatures. will, is that true? two-thirds of all mobile payments with apple pay? that actually surprises me.

>> yeah it's a big number out of the gate. we've seen other anecdotal evidence whether it's whole foods suggesting they've seen a 400% increase in mobile payment since apple pay has been introduced. fortunately still a limited number of supporters. given the success the early vendors are having with it. >> what does that mean for apple? what do they make on this? >> well, i think it's a pretty small sum for apple. as you talked about in the past it's more about the ecosystem for them. this is a key differentiator. apple pay, this is something the android ecosystem hasn't really introduced in any successful way yet. this is what really continues the momentum for apple. at least one of the elements. >> so this is just a sign of them continuing to innovate and give consumers things they want, you mean? >> that's exactly right. it's all about solidifying the ecosystem. over time it could become a more

meaningful revenue stream. this isn't more than a couple billion dollars today. you put that against a $220 billion annual revenue stream for apple, it's a small piece of that puzzle. but again, it's a key demonstration. i think that's the bigger driver for them. >> apple stock has been on an incredible tear. do you think there's a reason for it being there and where do you think the stock heads from here? >> you know i think there's continued upside. there's been momentum and any time someone throws out that market cap, it's a big concern. it seems like a big number. you know i think having been a ces in january, one of the things that kritalized our view is as you looked across the android ecosystem, it hasn't been the same level of innovation. right now, the apple iphone hard to believe seven years later or is as well positioned

competitively as it's ever been. of course you have watch coming in april. i'm enthusiastic about the prospects there. forecasting 20 million years in the first calendar year. again, not a huge revenue driver but a sign of ongoing innovation. >> what's the stronger dollar mean for apple? we know it's been a head wind but one that people shrugged off to this point. >> yeah you know this is something they walk through on the last quarterly call. i guess in the whole scheme of things they've had such significant growth you know they've been able to offset that. so it's been you know somewhat, you know, more limited. but still something that cost them up to a billion dollars. it's not insignificant. but in the revenue they're generating, it hasn't been as big of a stumbling block. it's something to continue to watch. >> will is this the favorite stock in your universal stocks that you cover? >> you know we've actually got three stocks we've been recommending. one of them actually is netflix.

that's had a nice bounce here. we continue to like that. apple is one of our top three picks. it had a great year last year. obviously it's off to a good start this year. we think again some good catalyst ahead of it. >> thanks for joining us today. >> yeah. thanks for having me. okay. we got a little new york real estate news grabbing our attention this morning. a report saying the new chinese owner of the waldorf astoria planning to convert the top floors into luxury condos. it is not unusual to add condos to hotel developments and experts say hilton likely to keep its hundred-year management deal for the hilton. >> a small living unit usually located in the large city some distance away from a primary residence. >> yeah. that was my idea for you.

>> nice. so it's not a pod-terry. >> no. >> wow. you say that with a lot of panache. don't you? all right. coming up this morning oes top stories plus quarterly results from deere. if you say deere in my house with the dogs that's all -- there's something about deer in the yard they go insane. but if you say the word deer oh, my god. they know the word deer. we're going talk about the company. and two strategists sound off on the economy. and then the nasdaq's march almost back to 5,000. check out the futures so far this morning. deer.

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tech stocks in rally mode. >> i get all my money advice from pbs. >> where should i put my money? tech stocks or money market? >> tech stocks! >> the nasdaq on the strongest winning streak in a year. trading at 15-year highs. we'll ask strategists how much room is left to run. prices of crude oil consensus all over the map. and warren buffett taking a big stake in deere. we'll bring you the numbers and talk tractors with an analyst. the second hour of "squawk box" begins right now. ♪

where business never sleeps this is "squawk box." >> welcome back to "squawk box" here on cnbc first in business worldwide. i'm joe kernen along with becky quick and andrew ross sorkin. equity futures rebounding a little bit this morning. up 1 on the s&p 500. up 9 on the nasdaq trying to set an all-time high. might do it in our lifetime. among our top stories that andrew is ready to bring you are -- >> thank you for teeing it up for me. here are the top stories we're looking at this hour. greece and the eurozone are close to a deal. that's according to reuters. today's meeting starting at 9:00 a.m. eastern time. meeting is critical. the current agreement expires on february 2th. and the eurozone finance

ministers tls still no deal with the slowdown in port operations. it's causing supply problems across the country. honda is stepping up cuts at north american ports. they expect 20,000 fewer cars because of the supply disruption. and the nation's current and former governors gathering far meeting. also taking part along with business and academic leaders. nasdaq having its strongest winning streak in a year. closing in at a new 15-year high. driving the index close tore the milestone level of 5,000. that's a level it hasn't seen since the dotcom bubble. let's talk about the market with chief equity strategist. also a "squawk" newcomer joins us today.

rob leary. rob overseas more than $850 billion in assets. >> whoa! >> wow. whoa man. you look worried. your shoulders are all -- really? >> not worried at all. >> $850 billion, how do you sleep? >> i sleep very well. we're long-term investors. we feel good about how we're investing. >> okay. just know those are retirees' money. >> we take it seriously. we've been doing it for a hundred years. >> i hope so. >> let's talk about what's happening around the globe. while the economy looks pretty good in the united states things have slowed down overseas and you have to start to wonder if that eventually catches up to us. what do you think? >> i think it would take them two separate ways. 70% of s&p 500 sales are derived in u.s. and canada. so we are somewhat insulated.

we're not totally divorced from that. you have to think six, nine months from now. improved currency or reduced currency. you've got lower energy prices and essentially free money. you can do the same thing in japan and say in six or nine months they're probably in a better place than they are this minute. so markets are going to reflect what is happening then. not what's happening now. and i think by taking current levels and trying to attribute it to markets was the wrong way to think about it. >> what's the right way to think about it. >> those economies will be doing better. you know, i'm fascinated by what france and italy are doing in terms of trying to embrace the business leaders and say, hey, how do we create jobs. or rather put in i guess what we would call executive actions to move some legislative process and get business going. and that's something almost unheard of. you know the socialists trying

to say let's get business locked in with us at great growth. those are positive. again, we can think about all the negative. negative news tends to be more salacious. that's why we turn on the evening news and hear about murders. not the stuff where the boy scouts help the grandmother across the street. >> i know you've been looking at different ways to invest money, but what do you think at these levels? >> even though we're close to market highs in the u.s. we feel pretty good. we may see a pullback in the equity market we think maybe in the spring. but overall this year we're still looking for mid to high single zigtdigit returns in the u.s. markets. we think the european market offers buying opportunities. and with all the noise in greece, we think there are buying opportunities in europe overall. selectively in the emerging markets. so we are feely pretty good about the markets overall. and again, we tend to think long-term.

pretty diversified. but we're pretty bullish. >> you've also been looking at different ways to kind of direct private equity invests. looking at things like direct investing into fracking. that's been a really difficult market over the last couple of months. >> yeah. so first let me take a step back. for the last hundred years, we've really been known primarily as a retirement plant form. mainly for teachers. we serve the financial needs of not for profit clients. but over the last years we really grew with asset managers. so we're bell diversifyied. >> i like how you say that. for a hundred years we focused on -- when did you join? >> i joined about 19 months ago. >> 19 months ago. but you feel comfortable saying that's what you've been doing for a hundred years? >> i do. for close to a hundred years. started by andrew carrnegie. we have to compete as a global

asset manager. that means from being one of the top mutual fund managers and bought investments last year. but we've also really grown alternatives. we're one of the largest alternatives managers in the world. that ranges in everything from hedge funds but also a real estate. we're a direct real estate investor around the globe. but also in the private equity, energy, infrastructure et cetera. >> that gets you to riskier areas than in the past. what do you do with the fracking situation at this point? jim cramer pointed out that wall street has no idea where markets are headed. if you loong at this wide array of ranges where people expect oil prices to end up. where do you expect them to end up? what do you do with a long-term investment like that when you hit rocky waters? >> yeah. so first i would say importantly our energy portfolio is well diversity diversify

diversified. so we're in solar and wind. we're well diversified. >> so if the portfolio is doing okay when wti collapses? >> it is. we've been doing this for a long time. it's not a new pursuit for us. we have a long-term time horizon. we've been doing this for a very long time in the private end, the public sector. when we see these oil prices dip or gas prices dip, we see it as opportunities. we'll try to buy things that make sense. >> what's the portfolio doing right now? i can't imagine you have enough wind and sew lorolar to make positive turns. that doesn't mean you don't see gains come back in but what's the portfolio done for the last year? >> for the last year it's been in the mid teens overall. but again we have been investing four years and many different kinds of facilities across energy. it's done well for us. that's what we'll continue to do. we tend to look out long-term time horizons. and so for us it's worked out very very well. >> tobias do you have any

thoughts on energy? >> we've had it under watch. we've been watching the stocks. they've come down in some instances precipitously. values are starting to look good for the work we do. i would say the one thing i'm kind of concerned about is very near term is my research has been talking about oil prices potentially dropping, you know with into a two handle area. just short-term because of the inventory. so i don't want to step in front of that. i'd rather wait for the stocks to come to me than chase it because it popped for three weeks. i think it's a bad kind of investment idea. the thing that's kind of different in energy though as opposed to other commodities is when you put up a new copper mine, it's got a life on it. and then the depletion rates bring down production on shale. the end of this year some of the projects that aren't getting funded now means you're going to have that production fall off and help stabilize the market.

it does mean the u.s. is kind of the, you know the marginal producer that sets the price. so it's hard to imagine going back to $100. >> what do you like right now? >> again -- what do i like in general? >> in general. yeah. >> we just did a study looking at 670 companies covering the ex-financials on their capital spending programs. you have about a 10% growth rate on discretionary led by media. by areas like -- excuse me -- hotels. and then on the other side we got about 9% increase in technology capital spending. tech companies are the single largest buyers of tech products and services. and i could name a whole bunch of companies. which i'm not going to. i don't have the proper disclosures who are doing a lot of stuff. media again is a big user of technology. think of it this way, tech investment is no longer discretionary. you need cyber security and you need to support mobile platforms. that you didn't even build out

five, ten years ago. we see this as an area that's going to be pretty strong. >> you don't think it's already in the market. >> it is in certain areas. i don't want to chase that 60 multiple security software company or social media company. i'd rather be looking at what we would call value tech. under kind of the base of building blocks to have a proper infrastructure. >> go ahead. >> i think we're in the same place. first of all, on tech stocks i don't think we think we're in a bubble right now. there are some stocks we would look at and say they're overvalued. but overall we're in a different place than in 2000. we feel good about that. as i mentioned, just coming back to energy look. i don't know that we've tested the lows we may test them again overall. but when we look out about over energy demand and with the over-supply we have right now, we still see 75 to $85 a barrel oil over the next three to five years. for us it's not about making

that choice over the next three or six or nine months. it's about making it over the longer term. >> all right. rob, tobias thank you both for coming in. >> thank you. we're going to check out deere and talk to an analyst eventually. $1.12 above estimates of 83 cents. but $1.12. they earned $1.81 last year in this quarter. and next quarter looking for $1.71. so the profit's down 43%. the company is talking about lower farm equipment sales that they're trying to deal with. and weaker conditions in the global farm economy contributed to the earnings per share. and revenue. although revenue at $5.6 billion was above the estimate of $5.53 billion. it's the outlook that also has people, i guess, taking a look at maybe lightening up because it is down a little today.

it's down 1.3% on this. the company did reduce its outlook for the year even though the first quarter was above expectations. second quarter equipment sales down 19%. and it will remain solidly profitable this year in 2015 despite a pullback in the agricultural sector. >> for the agricultural sector itself they're forecast down down 20% in 2015. >> last year it earned $8.63. they think they're going to earn $5.51 this year. if you're looking for -- people buy companies where earnings are growing. it was $9.09 in 2013. $8.63 in 2014. and we're now at $5.51 and they're trimming those estimates for this year. so it's definitely, you know, in reverse. you know you try to manage

expectations as a company and it is above the 83 cents. this is their most -- every year their most unprofitable quarter if you look at how they do things. 83 then $1.71 next quarter. >> makes sense with the planting season. >> yeah. that's the way it works. coming up when we return president obama seeking authorization to use military force against isis. we're going to talk to senator johnny isaacson, member of the committee that will consider the request. then a look inside the nasdaq facility that monitors for fraud and insider trading. we'll bring you that story. and oil is also a battlefield. jim cramer explaining how the spreading crude estimates. steven schork weighs in at the bottom of the hour. ncial noise financial noise

financial noise financial noise

welcome back to "squawk box." the futures are indicated higher across the board but just fractional gains really. 14 points on the dow. and the nasdaq that's the one to keep an eye on because we may throw another -- it's been 15 years since we had that party. we love those. a nasdaq 5,000 party. it'll feel like the first time when we finally -- >> i was going to say the prince song "1999". >> either one.

but it's going to feel like the first time. that's dirty. is that what he's talking about from foreigner? >> first time you have ice cream. >> all right. you're right. never mind. the white house's version of global war on terror is countering violent -- excuse me -- extremism. president obama wrapping up a three-day summit on the topic next week. the relations committee is going to consider the request to authorize military force against isis. and senator johnny isaacson is here. he is a member of the foreign relations committee. he joins us now. he will be weighing in on this in a big way next week. we'll have you weigh in right now. what do you think? >> i think it's time to come to congress and ask for the authorization but it needs to be limited like the president wants it. we need to go after isil and do whatever we can to wipe them out. you can't negotiate with somebody who will cut your head off or burn somebody alive. >> that means boots on the ground nap means a much more

aggressive approach. >> absolutely. and it means that the war fighters and the generals and the people we pay the money to guide the military they need to make the decisions. we don't need to hold their hand. >> what do you think this is going to cost? >> i'll tell you what it will cost if you don't. it's going to hurt the economy. going to hurt the country. the cost is greater if you don't do anything than if you do and give the military -- >> what does this war look like to you? >> right now it looks like a managed conflict by the united states with air strikes. >> no no. i'm saying the war that you want to pursue looks like what? >> it looks like destroying isil which means you have to go after them. you have to kill them. >> but how many troops on the ground? >> maybe 10,000. most of them in special operations type of modes. you can't do good air strikes unless you have people on the ground pointing out the places to hit. >> it's -- i don't know what

intelligence knows, but the situation is libya and i don't know what -- we don't even know the extent of all the arms lead at this point. we don't know how fertile of the areas are too. the whole area has got to be worried at this point. there are young disenfranchised men looking at this saying i am going with isis and this is frightening. >> i can't talk about all i know, but kii can tell you this. all of the countries that have ak says, there are war fighters going to syria and being trained right now that will be sleeper cells for isil. it's something we've got to stop. if you don't cut off the head of the snake -- >> and two guys with ak-47s is not hard to set up as we now know from paris. >> senator let me ask you. isis pays no attention to the traditional maps and where lines have been drawn for different countries. where does this take us? it takes us to syria and what

other countries? >> levant is all of eastern mediterranean from egypt to the coast. that is a huge area. that's what they're declaring as their state now. they'll only make it larger. >> how do we do this? do we wait for egypt to say come on in and help us. i have a hard time envisioning how we set this up. >> first of all, we don't talk about it in advance on television and let them know like we did yesterday which was a terrible idea. we need the intelligence people in charge of it to put together the brake light plan give them materials and the man power they need to go after them. our military has always proven it can be superior if given the opportunity to use whatever it takes. >> you also tied this not just to the atrocities we've seen on the grounds. the beheadings and things but cyber terrorism as well. i was under the impression that

isis didn't have those capabilities. am i wrong? >> they're using social media to get their propaganda all over the world. they've showed the beheadings and burnings. they released it when it was most effective for them. they're a sophisticated operation and we've got to wipe them out. >> have you seen them and do you know something we don't on the cyber side that they're attacking our banks or our infrastructure or something we don't know? >> 24/7 america's being hacked and attacked from all kind of places not the least of which is russia. not the least of which is china. that's a constant battle we've all go to fight. it's a battle that will always go on. it's a battle that we can't lose. >> i just want to understand if we're conflating that with isis. >> no. i'm not conflating it with isis except to say once terror starts to rule and people cower in front of it. >> who do you think the republicans should run in '16?

>> the very best candidate we can get. we've got good ones. we don't need to be on the fringe. jeb bush is a great guy. scott walker's a great guy. rand paul has become a much more pragmatic politician. we need somebody who's willing to take the battle to the democrats. take the message to the country and not be narrow in their perspective or focus on issues. we need to be a broader party on the broader sues of america because we're a big diverse country. we need to be a big diverse party. >> you know, every social media, the news. the way the country seems to -- the time has been contracting on how quickly the country changes its mind on where it wants to go. like every two years we usher in the republicans. and we usher in hope and change. two years later more hope and change. and i just wonder whether it's going to stay that way or whether the country at this point might be you know what? it's been eight years, maybe we

try something else. >> i think something else we need to try is decisive action. the business community is ready for it. we need to stop the over-regulation of business and free up american business. i think american people are looking for leadership against isil. when a housewife in america with two kids six years old turns on the tv and there's a beheading or the burning of a human being alive or the burning of a building with 45 innocent people in it that's a horrible thing for them to see. and they want decisive action. they don't want their children seeing that on television. they want the america they used to know. you know 25 30 years ago we wouldn't have stood for this as long as we have already. >> so there was something yesterday that suggested that the mood of the country has gone back to the point where they are ready for war but the mood in washington is not. would you agree with that? >> i think that's reflective of some in washington. there are a lot more of us willing to speak out. and this authorization for the use of military force debate which begins next tuesday is going to be a critical debate for our country not just in the short run, but the long run.

we've got to lead the free world to a decisive victory over terrorism. >> all right. thank you for coming in this morning. >> thank you. when we come back this morning, the team at the nasdaq that monitors for fraud, insider trading, and market manipulation. an unprecedented look at the facility that processes more than 6 billion pieces of information a day. and later, video chat that can monitor your emotions. we're going to show you this. the ceo of uvu explains. anything? no. you? no. aflac! what are you guys looking for? claims! legend has it these hills are full of 'em. it can take months for an insurance claim to surface. claimin' takes patience. aflac paid my claim in one day. they got some new-fangled kinda one day payin' machine? hehehehe

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coming up cnbc getting an unprecedented look inside nasdaq's surveillance.

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welcome back to "squawk box," everyone. in our headlines this morning, zillow reports that home rental prices rose last month. at least on the national average. but prices did dip or barely move in parts of the midwest and mid-atlantic. honda is cutting production slightly. citing a disruption because of the west coast ports dispute. and a deal to postpone taking over of cysco. los angeles has been without an nfl team for two decades. but there's a chance that the city of angels could get two teams. the oakland raiders and san diego chargers are working on

stadium deals in their respective cities but the teams are going to announce today they will jointly pursue a shared stadium in the city of carson in los angeles county. and that would be an alternative if the chargers and raiders can't get public subsidies by the end of the year, they will pursue a privately financed shared venue in l.a. i can't believe it's been 20 years since the l.a. raiders. i guess it has. they moved back 20 years ago. wow. nasdaq has never let reporters in their high-tech fraud surveillance facility until now. but today we're going to bring you an all access pass. eamon javers joins us now with that. >> this is nasdaq's secure market watch facility in rockville, maryland. they've never allowed reporters in here because of the sensitive nature of the research these analysts are doing here. this facility is staffed 24 hours a day, six days a week. what they're looking for here is

all kinds of financial fraud. everything from realtime high frequency trading fraud in the markets to old fashioned insider trading like we know of from years gone by. and what they say here is they're monitoring everything from the moment that the company is listed with the nasdaq including doing things like a detailed background search on the executives to formed that company under the theory that fraudsters flock in groups. all the way up to monitoring in realtime all of the trading going on in the nasdaq day-to-day. they're talking about 4 billion messages a day monitored here in this facility. and they say that there are algorithms that monitor that and are looking at 35,000 separate parameters. they say that the alerts that pop up on these analysts' screens come up within two seconds of suspicious trading. they say 766 times in 2014 they

found suspicious incidents and referred those two federal regulators for follow-up action. they're also monitoring news events and realtime news details on twitter to look for when news actually breaks when the spikes in trading are, and they're going back and reconstructing those spikes and based on when the tweets came in when the news actually broke looking for any trading. >> eamon, question for you. you have them finding suspicious instances. i forget the number you said how many times? >> 766 times last year they said they found suspicious incidents and forwarded those to regulators at the fcc and other places to follow up. >> how many times did they follow up and find any serious actions against any of snem. >> well, we're going to talk to nasdaq's ed knight later on and we'll ask him that. they'll say regulators -- by the time they find the suspicious

incidents from here they're pretty sure something squirrely has gone on but they can't necessarily prove it. then regulators can pull all the data found out who exactly made the trades and follow up with subpoenas and things private entities can't do. >> wow. that's fascinating. eamon, thank you very much. we will watch later today. go ahead, i'm sorry. >> i was just going to say it's all about keeping markets as clean as possible. what they say here is that if they have those clean markets, you build up investor confidence. and this entire effort is about demonstrating to the public that the markets are fair and trustworthy. >> okay, eamon. thank you for that. we will keep watching. crude has continued a pretty wild ride. although came down and it's just down. snapping a two-day losing streak. joining us now is steven schork. we're just going to wipe clean any of the -- any history that we might have pointed to to say that maybe you didn't correct

the call. let's just wipe it clean. you can start new. >> thank you. >> well, we can't find anyone that actually -- and it would have been hard to predict, obviously. but where do we go from here? >> well right now for the past two months we've been at $50 plus/minus $4 on either side. in that time volatility has more than doubled from about 39%. which is about $1.50, $1.60 per barrel per day to over 110%. which translates to $3.80 per day per barrel exchange. so lots of uncertainty right now. this tends to happen after we've had had a very long directional move. we've been sideways now for the past two months. so this volatility is indication of uncertainty. both the bulls and the bears now lack conviction to push this market outside of the range. so where do we go? well, we're right around $50.

plus/minus $4. in the near term we're still looking at a significant amount of supply. crude oil stocks in the united states, 426 million barrels. the last time stocks were this high in this country, gandhi was "time" magazine's man of the year in 1930 and most germans still thought hitler was a clown. so we are still sitting on absolute glut of oil. not enough demand over the next couple of months as we continue to produce oil at near-record pace, we import oil from canada. so that said we're likely in the near term to break that support right around $40 and head down to $40 and likely see oil with a $30 handle. now, the concern here is because of all of this supply we have the situation on the refinery side. we're looking at now margins right now that are 50% above the price of crude oil for the market. so if you're a refiner, your margins are fantastic right now.

so as we start to pull back in this weak demand we will pull back on the demand for crude oil, but fewer barrels going to the refinery obviously translates to fewer coming out. so we do set the scenario right now for short-term weakness as supply continues to way outweigh demand. but as we get into summer and demand picks up we're looking at probably support. but i do think we could see $40 or sub-40 before we begin to head higher in this market. >> how long would it take to pick up with where production is right now? >> i mean it's an excellent question. and that is the big question at this point. we're still looking at a year this year 2015 where production is still going to way outweigh. that is we have a lot of cement a lot of steel, and most importantly a lot of debt sunk into the ground. producer need to get this oil. they need to monetize this to

service that debt. so we're looking at the remainder of 2015 with demand still way below supply. we're not looking until 2016 at the earliest until we get a balancing back in this market. joe, you've got to figure at this point i could take a barrel of oil, rent a vlcc a tanker pay $45,000 a day to charter that tanker and i would still make money by selling my product out and locking it into the forward curve. i would not be able to do that trade if demand was so weak -- if supply was so much in balance with demand. so it's not until we begin to see the back end of that curve flatten out where i can no longer make that arbitrage. that's going to be the first signal that the market is coming into balance and we have reached a bottom. we're not there yet. so until we get there, you have to like oil prices lower. >> right. yeah. once you sort of can see that it

wasn't necessarily demand related where we were worried about a slowdown then -- you figure europe's coming back eventually. we're starting to accelerate here. maybe things go a little bit better around the world. you say wow it's going right back up. that's if it was demand. if it really is supply and this is sort of a new paradigm where we're producing so much more in the country that we don't shut off that quickly. they've already borrowed the money, they've already got all the steel and everything in place. they don't just shut that off. they'll continue to pump that. if we have this chronically higher supply, even if demand does continue to trend higher this could be long-term. and so you say maybe under 40. i'd love to see under 40. although there would be a lot going on with some of those smaller companies. it would be ugly. and some of the smaller countries too. >> yeah. i don't think we want to see

sub-$40 oil. >> i do. >> no. where they're dependent on the sale of oil -- >> i'm sorry. things happen. you should have thought about this. prices need to go where they need to go. that's why i said i don't know if bulls and bears really matter either, stephen. i don't care what they do. it's the actual supply/demand of the producers and the users that are going to determine this. not what the big money guys decide is the right price for oil. that's what's so great about watching it. it just goes where it goes. >> and also we have to keep in mind oil prices are the canary in the coal mine. when is the last time you saw such a precipitous drop in an industrial modty because of good economic news. the next time that happens won't be the first time. so this is i don't think the global economy here in the united states is all rainbows and unicorns. >> wait a second. you think this is a demand situation not a supply issue?

>> absolutely. becky, let's look. we've been producing oil at record pace for two years now. what has changed over the summer that changed that scenario? the supply picture has not changed. so the drop in price to me is an indication of, i think, worrying global demand at this point. and so right now, look. if we read the minutes from the fomc, they're finally getting on board with the fact that yeah it might seem great that oil prices are falling. but we have to keep in mind oil prices commodity prices do not drive economies. economic growth or economic contraction dictates where commodity prices go. and when you have such a sharp fall in commodity prices that's not because of economic demand. i mean that is because of economic demand, excuse me. and i think that is a telltale. all we're seeing right now is we're not seeing increased spending in the united states. all we're doing is seeing

spending move from one side of the economy to the other side of the economy. it's still a zero sum game. velocity of money is not increasing. so this is not good -- it's not indicative of economic growth. that is a worrisome trend. >> all right. thanks stephen stork. it's misspelled behind you. it's stork isn't it? you have a stork there. >> yeah. goit to talk to my tech people about it. >> it's ibis. it's a bird. a bird that's standing behind him. when we come back this morning, if you are still paying for international telephone calls, get with the times. video chatting online is free. up next we'll talk to the ceo of oovoo.

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♪ welcome back to "squawk box." first with athletes now business interactions. facial emotional analytics is the next push in social video app oovoo. with us now is the company's chairman and ceo robert jackman.

you run oovoo. thanks for coming in. for those unfamiliar with oovoo, what is it? >> oovoo is a viral video communications application. >> what does that mean. >> we have hundreds of millions of users that commute face-to-face. most are under 25. they use us like a virtual dorm room. on mobile devices mostly. and they communicate. after school it's the virtual dorm room, if you will. >> what's the difference between that and a facetime? >> well we do -- many of those of our competitors do things that are one on one. we do multiple parties on a mobile device. >> like five people in five different places? >> up to 12 different people in 12 different places. and then we focus on two different things.

one is the quality. the quality of not getting your calls dropped or a fuzzy image and things like that. that's how we differentiate ourselves. and the other is innovation. trying to do really cool new things that appeal to people in our demographic. >> i just want to go to the phone dropping issue. i use facetime a lot, it doesn't always work. are you -- what are you doing that they're not? >> on a mobile device you're in a situation where you have something called pact loss. you move around and the situation changes. we retransmit packets. it allows us to deliver a more robust signal more of the time. >> okay. and talk to us about -- one of the things you're doing is facial recognition. >> correct. that's one of the places we innovate. we innovated in multiparty the other thing we're doing is facial recognition and emotion detection which is cool. the ability to not only transmit pixels but to make those pixels intelligent. what are you thinking? how are you feeling?

those are the types of things we can read -- >> can you do lie detection? >> things similar to that yeah. we're reading, basically, your emotions based on a complex set of algorithms. >> so if i'm communicating with you, i not only see your face, but i see what? what is the screen telling me? >> so today in -- we have a software development kit which we allowed developers to take this technology and to build applications. and some of those applications it's a game you and i will play a game together like a staring contest. and the software will tell whether you blinked or didn't or you showed some emotion. so things like that. in our regular visit owe chat we don't turn the emotion detection on. we don't just turn it on. but we have different kinds of applications that people are building using this. focus groups. you could do focus groups not

only are you reading what people are telling you. but it can tell you what they're thinking. >> where's the money in this for you? >> the none this for us -- >> where's the revenue? >> our revenue model is advertising. which is a lot of what social media is based on. then we allow developers to build applications like focus groups and things like that where they pay us based on the video minutes they use. >> how much of it is a use for recreational purposes? do you see a lot of businesses using it? >> we do on the software side of our development kit. but the consumer side which is the majority of our business today is mostly in advertising. >> what i don't understand is 12 people in 12 different locations. how do i even see that on my mobile phone? i can't imagine having four pictures on there. >> what we allow you to do is start with four on a mobile devise. you can put people in based on who's talking.

you know what it is? it's very ambient. kids will turn this on after school and leave it there. they'll do homework back and forth. people will come in and out of the experience. it's an ambient video business. >> you use a lot of band width. >> we do. >> you're using the band width. >> we are. >> do you think you should have to pay for that band width? >> depends on the situation. i'm not a huge fan of net neutrality. i think that it's too early to regulate. the people who are being asked to pay are using a lot more band width than we are. this to me is a fight between the big guys. it's netflix versus the isps like verizon. i think we may need to regular late it one day. >> you think you have to pay? >> i'd be happy to pay if we're using the type of band width that some of these large places are. >> this is your argument that guys like him -- >> one of the things i've

worried about is whether a smaller company trying to get in the game -- >> put this in your -- >> it's a false argument. >> i know. talk to him. help me. >> let's start here. it's a slippery slope. handing this over to a federal agency title two power -- >> sounds great, andrew. >> i think it's sounds awful. >> isps are common carriers. but here's the question. where does it stop? and i'll give an example. some of the things president obama said about things why we should have net neutrality, doesn't it appear to services on the internet as well? think about search. isn't search too important? think about "the new york times." shouldn't you be able to find anything you want any way you want? why should google control it? so that's a point where i say how far do you want to go? >> thank you. you're right. >> thank you. >> thank you, you're welcome. >> on that note he wants a commercial immediately. >> no. you're right.

it won't help. >> think about the slippery slope. >> every argument he hears the truth and it just -- he compartmentalizinges compartmentalizes. thank you. thank you. words to live by. >> sit down don't move. >> we have to regulate your movement. coming up your list of stocks to watch ahead of the opening bell. then we're going to talk tractors with deere. the company out with earnings earlier this hour. and an outlook not everyone's happy about.

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here are some stocks to watch that we are watching because of what's happening. this morning walmart was downgraded to equal weight from overweight. the retailer is likely to see any near term benefits from its increase in wages. it will cost the company a billion dollars which doesn't sound like much to walmart. and a small market cap name but big name this morning. rocket fuel shares falling drastically. the online advertising company, the sales were weak and its guidance was also weak. you can see that stock down almost 25%. >> okay. coming up presidential politics. minimum wage and the fallout from greece. we'll talk about that with steve rattner and dan senor. up next the 15-year-old disrupting the babysitting market. we're back in a moment. opportunities aren't always obvious. sometimes they just drop in.

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3 million rugged square miles with a single broadband connection. when emerson takes up the challenge it's never been done before simply becomes consider it solved. emerson. wages and war. the issues coming out of washington that matter most to your money. two washington watchers join us to discuss. big things come in small packages. for some that means small cap

stocks. why one says names like grub hub should be in your portfolio. plus a 15-year-old raking in millions with her nanny start-up. the final hour of "squawk box" begins right now. live from the most powerful city in the world, new york, this is "squawk box." >> welcome back everybody, to "squawk box." this is cnbc first in business worldwide. i'm becky quick along with andrew ross sorkin and joe kernen. we've been watching the equities this morning. the nasdaq up once again. >> what happened? >> looks like things are relatively down this morning. >> they were up 18 last time we saw them. >> s&p futures down by 3. nasdaq looks higher. in your european markets at this

hour things have gotten weaker there as well. the cac is down by .75%. if you look at the greek index, it was up by .5% earlier. now down close to 2%. okay. let's also tell you what else is happening at this hour. eu finance ministers are gathering in brussels for an emergency meeting. shipping executives plan to meet again today on the slowdown on port operations. it's causing supply problems across the country. and another blast of record-breaking cold freezing in the united states. this is now the coldest morning in chicago, apparently in 79 years. and it's like zero here. >> it's cold because it's warm. among stocks to watch today, deere. the company's quarterly results topping estimates. but it's warning of a continued weak global market for farm equipment.

joining us with more on the numbers, analyst at jpmorgan chase. ann, if you're going to keep following this sector we just got to look for some bright spot here at least. so it was better than expectations, right? or maybe you should go into the internet space. >> i think that's exactly right. this was about as good as we could expect given that their agricultural equipment sales were down 20%. this is just con fir nation that deere is good at managing cycles. >> how do these cycles work? because what we think is happening is that the u.s. is recovering. europe is as bad as it's going to get probably. i mean what determines the agricultural market for equipment for those of us that aren't as familiar as you are? >> well i think agricultural is unique, right? there's a very important difference in this u.s. in particular. that is that u.s. farmers when

they have money, they spend money. when they don't get money, they don't spend money. so the cycles can be very long. we've just been through a cycle where we threw new demand in the equation with the ethanol and ethanol mandate. farmers have been spending on equipment for about the last six years. i think the key controversy around deere going forward is you know is 2015 the trough and we get a v-shaped recover are i? or is 2015 just the beginning of the next down cycle? and i actually believe the latter that you know we could be going into a decade of lower equipment sales for somebody like deere. >> you know even 2016 if you look at the analysts' estimates, they're looking for $5.39. below what the estimates were for 2015. >> i think everybody has seen the upcycle. you know the big question for investors and what we're

concerned about is that deere becomes a value trap because we go into this steep decline and never get back to the $9-plus that they earned in the past cycle. >> you know with oil and is there a way of looking at commodities as a whole and just assuming that what happened with oil is going to keep a lid on all prices all commodity prices and therefore that plays into your long-term cycle where this is not a great place to be. >> it does have some impact. the bigger impact for somebody like john deere is the strong dollar is the negative for commodity exports, particularly the commodities that our u.s. farmers grow. so that's probably a bigger negative catalyst coming out of this than oil prices itself. >> so okay. so we should dig in if you're at deere and looks like they are. they're not going to be hiring

anyone. they're probably going to continue to look for cost savings wherever they can. >> yeah. the big thing with these big cyclicals is to manage the detrimental. they delivered what we would call a 35% on agricultural equipment. frankly, that's about as good as you can do. if they keep doing that, you know maybe the stock drifts higher with the market but we would not be telling investors to be buying and accumulating a position at this point. >> okay, great. thank you. thanks for your analysis this morning. walmart's plans to boost pay for 500,000 of its workers reigniting the debate over the minimum wage. in an exclusive interview here on cnbc walmart ceo doug mcmillon explained the move. >> we want to provide a great customer experience and we want our associates to know how much we value them. the changes we're making include

structural changes in the stores wage increases, training programs. and this company as you know has always been a people business. it's a people business today and it will be tomorrow. so our associates, their pride in the company, the ownership they take, those things are vital to running a good business. today we're investing in them and we want them to know how important they are. >> here now to agree on this and many more topics dan senor, cofounder of the foreign policy initiative. and steve ratner a cnbc contributor. the only place i saw, guys where this was seen as sort of that walmart was shamed into this by pressure was in "usa today." both "the new york times" and "wall street journal" said it's time in terms of the competitive market place and the labor market right now has gotten to the point where it makes sense for walmart to do this strategically to attract the best workers that they can.

and it's a good thing. >> i think the labor market is tightening, they want to get better workers. >> this is the way it should work. >> which is a beautiful thing. >> it's a beautiful thing. >> he says beautiful thing. i know you hate we agree. a commercial thing. there is a bit of pr involved. this is a way to have a better image. >> and walmart also endorsed the employment mandate on obamacare. i don't think this should be viewed as a proxy or a vindication or validation for those who think we need a national minimum wage increase. >> does it slow down that movement? >> no. i think there's an advocacy movement arguing for even higher minimum wage. the dollar needs to be higher for minimum wage and in states a i cross the country. i think there's some that are going to use this as this is just the beginning. we need to get going. i think we need to isolate this as a walmart decision. >> do you think democrats say

the market's working or democrats say the market's not working at all? >> no the markets still need an increase of minimum wage. we still have millions of minimum wage workers. it struck me in one of the papers today was a map that shows has higher minimum wages higher than the federal. this is an issue where the states are ahe of washington. >> it also would be nice if we got a 4% economy where everybody suddenly was above the minimum wage. it was antiquated. and got to where the growth just caused companies to pay more on their own. >> it's a great theory. i'm not sure it's ever happened in practice. >> they try to hold their workers. i understand that. >> they're capitalists. >> that's redundant for you. >> some of my best friends are capitalists. >> enough of this. what about both of you have weighed in on bush's speech. there was a freudian speech.

it said bush said -- as far as democrats, there doesn't seem to be anyone -- any real challenge to warren. >> i saw that too. they sent me your notes and you said that. he meant hillary. >> i don't think you said it. >> right. you're a clinton person. >> i take -- >> a foe? f-o-h? >> i don't know what that is. i think warren has been clear she's not running. there's a constituency that would like her to. but it's interesting that this may well be e the time that i can remember in my lifetime that you have effectively uncontested primary without it being a sitting vice president or someone else who's a presumptive nominee. >> politico reported earlier this week that hillary clinton went to meet with elizabeth warren. >> a "new york times" report. >> in december they had had a meeting -- >> of course she did. it's the smart thing to do. why would you not meet with her?

>> what we didn't hear was what warren said in that meeting. >> you don't think it was neutral? i thought it was bring her under the tent to shut her up. >> that's part of it. but i think she also recognizes that the left the mooumt in the party, the orientation of the party is shifting beneath her feet. that what warren represents is bigger than warren. warren is just a vessel for what's going on in the party. and hillary wants to -- even if warren doesn't run, she wants people like warren to neutralize this movement that's happening. so it's bill de blasio elizabeth warren, hard left players. >> question to you, can that actually happen? meaning if she's just the vessel, can she stop that? >> "a," i don't think warren is going to run at all. dan is right that there's a group that are further out on the left than many of the rest of us in terms of how to attack this problem. and it's going to be tricky for hillary just as it is for the republican if it's more of a

centrist to try to articulate a vision and a set of policies that don't alienate the people that are more progressive than the rest of the party. >> do you think it's a problem that hillary has taken all this money from foreign companies and others? you've seen a number of these reports coming out in the past week. >> it's so interesting. my wife asked me this yesterday. i said to her you're going to hear a story where they say hillary took money from this group and said something or did something on behalf of that group. lo and behold on the front of "the wall street journal" yesterday, there it was. so you're going to have many stories trying to tie these things together. i think the clintons -- i don't think in the end that it's going to be an issue. >> if you take a step back and look how she spent the couple years since she left the state department. you know, the foundation is cranking away raising this money. she's giving quarter million dollar speeches. given what's going on in the democratic party and how there is this hyper-populist, you

know movement inside her own party that of all the ways she could have spent the last two years, leave the foundation thing aside. just the making money, spending time is this really what she wants to be projecting heading into the presidential election in 2016? >> what you're saying is that since jeb bush was doing more or less the same for the last ten years, you're saying it's okay for republicans -- >> i'm not saying it's okay for republicans. i'm just saying if you are her and you face the pressure she's facing, david axelrod made this point. she hasn't spent the last couple years thinking through how she's going to -- >> i don't think that's fair. i think she spent an enormous amount of time thinking about what she wants. i think she's given some speeches most notably one at the new america foundation six or nine months ago. i don't disagree she has to do more articulating. saying she's running from one banking investment conference to another and nothing else that's not fair. >> flying.

>> okay. flying. do i think they necessarily fully anticipated the reaction of the public to the idea that she is making money from speeches? did she handle every response to every question about it perfectly? no, she didn't. but that's a little bit of hindsight. i don't think what she did is no different from what any other person who served in public service and then wants to go out and make a living and articulate their point of view does. it's no different. >> sorry, go ahead. >> i was going to go to a topic that i don't know if you want to go to. i want to get your views on rudy giuliani's comment. >> dan's already -- things off camera you're going to tweet out? nobody likes a rat, dan. >> if you're tweeting do it on tv. >> no no. here look. here's my bottom line. giuliani's entitled to his point of view. he's not running for president. joe kernen is entitled to his point of view. let me finish. i want to articulate it. i'm simply saying if republicans want to win in 2016 i actually want us to win in 2016.

i do not think it is healthy for the modern republican party to go into 2016 having a national debate about, like a psychoanalytical debate about whether or not barack obama loves america. i think we should be having a national conversation and put forward an agenda about what to do with foreign policy, how to to deal with domestic issues or agenda. a real agent. you want scott walker to have a national debate about whether barack obama loves america? that is insane. >> that's no what i said. yesterday when he said i'm not going to comment on giuliani you said he should have used it as an opportunity to show leadership. >> i think he should say -- >> he can think whatever heps. >> the problem is he didn't say anything. >> that's right. >> he said i'm not going to talk about it. say i don't think the republican party should have a national debate about whether barack obama loves america. do you think he loves america? >> i give everyone the benefit

of the doubt. >> do you think he loves america? >> i give him the benefit of the doubt. i don't know if he loves corporate america. >> do you think it's good for republican national candidates to have this debate? no -- just -- do you want chris christie, ted cruz all saying what giuliani says? >> suddenly you respect the sanctity of the presidency. now all of a sudden you're did -- >> what does one have to do with the other? >> suddenly giuliani can't voice his opinion? >> i am happy for him to say what he wants. [ overlapping speakers ] >> in honor of scott walker sitting a few seats away. >> leave giuliani out of it. do you think candidates running for the white house should -- do you think it's healthy for the republican party to weigh in on this? >> i don't think scott walker had to -- you know this was an opportunity for him to show you that he had leadership. by distancing himself -- >> do you think it is healthy for candidates running for the

republican nomination who actually want to win the white house to be engaging in a national debate about whether the current occupant who's a lame duck by the way loves or hates america. do you think it's a good discussion for our party to be having right now? >> you wanted him -- >> it's not what i wanted. answer this question. no, i don't. and he didn't answer it. you're the one that wants to debate by him saying i don't want to debate. i just want the reality -- >> in the notes it said -- >> now you're reading off these notes. >> what you told our booker was that he should have distanced himself from giuliani. it would have shown leadership for scott walker to parrot whatever your pc viewpoint of whether -- >> i'm telling you what i think. >> of course he should have. >> why? >> scott warren should have said -- >> scott walker. >> you got warren on the brain. >> scott walker should have said i don't think it's productive to be discussing whether the president loves america or not. we should be discussing the serious issues facing this

country. end of discussion. >> right. >> that's what he should have done. >> so joe -- >> i think either way -- for him to say giuliani can voice whatever opinion he wants, i don't think it's the same that -- >> every one of these guys -- >> if you look at what scott walker has done in wisconsin which is an amazing story. chris christie some of the things he's done in new jersey amazing. if you look at jeb bush in florida. you have important things to talk about. a basis for a national conservative agenda. let's talk about that instead of this insane debate about -- >> there's no reason for us to bring it up now. that's why we weren't going to. >> you brought it. >> no he did. >> i forced the issue. >> you're tweeting about things. >> you're reading off the notes i e-mailed to your booker. >> that's how we do things. >> you usually mention this stuff off camera. >> no no. i don't tweet it out. >> thank you, gentlemen. we should also tell you -- by

the way, breaking news. paul mcculley of pimco has stepped down from pimco. we will talk about that after the break. and many other things. when we come back this morning, we will talk about that. stick around. it can bring out the worst in people. but the m-class scans for danger... ...corrects for lane drifting... ...and if necessary, it will even brake all by itself. it is a luxury suv engineered to get you there and back safely. for tomorrow is another fight. the 2015 m-class. see your authorized dealer for exceptional offers through mercedes-benz financial services. ameriprise asked people a simple question: can you keep your lifestyle in retirement? i don't want to think about the alternative. i don't even know how to answer that. i mean, no one knows how long their money is going to last. i try not to worry but you worry. what happens when your paychecks stop? because everyone has retirement questions. ameriprise created the

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pimco announcing that paul mcculley is stepping down as chief economist. mcculley returned last may after being recruited by bill gross with whom he had a close friendship. of course bill gross left and now he has left as well. we're going to switch topics for a moment and talk about ambition

and ambitious people. we're introducing you this morning to the 15-year-old that is taking new york city babysitting market by storm. she recently had a hire a ceo for her company because she had to start high school. she is the founder of nannies by noa. and the ceo is here as well. allison johnson. this is freshman year for you? >> yeah. my freshman year of high school. >> so you have this huge -- what's turning into a huge babysitting nanny business. >> yeah. >> tell us about it. how did it start? what was the eureka moment? >> i started in august of 2012. when we were a kid my mom went through a lot of thatnies. i came to the conclusion that the agency she was working with did not know what a nanny was. it's not a personality. it's a vibe that a nanny has. new york is different than other places in this world. so i figured i was a new york kid, i knew what new york kids wanted in a nanny. so i set out to start with a couple family friends and then people really thought it was a great idea to have a kid helping

them. and the trust for the brand grew. >> so you would interview nannies. >> i trained interviewers to do an interview. i would do a phone interview. >> what's the vibe? just try to articulate, describe what it is you're looking for that you think most parents aren't? >> it's really hard to describe but i would say it's someone who's not scared of you know situations. new york city is a scary place sometimes. who is very savvy, can jump on the floor, play with kids and is really ready for anything. >> and do you do all ages? >> all ages. we have nanny who is are college students, college grads, and older nannies. >> so full-time nannies? are these babysitters? people need to go out for a dinner or something at night and they need a couple hours, what are we talking about? >> we do everything from part-time to part-time afterschool positions, travel nannies, one-time. all of that stuff. >> allison, how did you get

involved with this? >> i had interviewed and applied to be a nanny with noa. she did her phone interview with me and ended up recruiting me from that point forward explained to me. i was in shock, i didn't know at first that she was 14 at the time. >> what did you think? who did you think she was? >> i mean i knew she had created the company. it was on her website. i didn't know her age. i thought she was a savvy new york city woman who, you know had started this agency on her own. i really -- even in talking to you on the phone for the phone interview, i can d not know her age at first. when she approached me for working for the company on thoer side of things, she let me know she was starting high school and wanted to have more time for her education. >> wow. so how's the balance going so far? >> it's been really great. obviously the business is my baby. so it was very hard to let go but allison is a social worker, so she has that background. she gets people. she grew up in new york and

she's been a nanny. so i really trusted allison because she knew what it was like for the parents, for the kids, and for the nannies. i'm able to have fun with my friends and also be involved in the company. >> what's one dead giveaway that you would knock somebody out of contention for? what's something you say this is not acceptable? >> it depends. we're tough. kids and parents want the best and so if there's a red flag of course, we have to rule them out. i have to be tough. >> we're a business show. how much money are you making doing this? >> we don't disclose our financials. we're a private company right now. >> brilliant answer. she's been taught. brilliant. how many people have you placed? >> we have on our network 150 sitters and nannies who have gone through our extensive screening process and 190 clients. >> thank you guys for coming in this morning. >> thank you. >> one of those great stories. coming up next we're going to talk about malware that

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welcome back to "squawk box"

this morning. let's take a look at stocks in the news. barclays downgrading walmart to equal weight following yesterday's announcement about wages for workers. they say they won't see enough benefit to offset the expenses. and innsanofi has a new ceo. he's going to start that job on april 2nd. becky? well can your phone be hijacked? a devious android malware can make phones or take photos even if you shut your device down. the malware hijacks the shutting down process making it appear that your phone is actually off, but it is not. in this state, the malware can then use your phone to send your messages to a third party, record a call or take a photo essentially turning your phone into a device that spies on you. avg which posted code excerpts

showing some of the functionality, says it's on versions below 5.0. a growing list of companies are pouring billions of dollars into the industrial internet of things. that's the integration of automation tech in manufacturing, mining and other areas of the economy. cnbc's morgan brennan is in san ramon, california. she joins us now with more. i talk about the internet of things at cocktail parties a lot. and people nod and say, wow, he's very -- i'm very savvy. can you explain it to us a little maybe? >> sure. okay. so let's start with a picture. this a wind turbine. we're showing you a picture and not realtime data. this a wind turbine by general electric and equipped with sensors. what make asthma sheen like this special is it's connected to software that using both realtime and historic data to -- this machine and the wind farm that it's part of to generate

anywhere from 5% to 10% more power. that in turn can boost profits as much as 20%. and so that is really part of this larger trend, this internet of things. or here at ge's 3-year-old software center what's simply known as the industrial internet. so at ge what they've done is developed software and dozens of applications that are catering to these big machines across a wide variety of things. from railroad networks to in the case of this video here an application that is tracking oil and gas pipelines for environmental risks to get well ahead of any potential leak. this is still very much in infancy stages, but it represents a huge opportunity. so spinning on the industrial of things could reach $500 billion by 2020 and the broader economic of this could reach the trillions of dollars by 2030.

it's partnering with everyone from at&t to soft bank to verizon to cisco to intel. just to name a few. in general a number of industrial heavyweights are starting to pour resources in this area. including honeywell, emerson, and rockwell. 5% to 10% more generation in turn 20% more profit. it's this idea of increased productivity using technology. >> all right. much better understanding now. >> may have a cocktail party tonight. >> you're ready for the next -- yeah. >> talk about the cloud. internet of everything. internet of things. right? >> you sound like you know what you're talking about. >> scaleability. transparency. >> blah blah blah. >> yeah. that's why people leave when i'm talking. let's talk about finding opportunity in small cap stocks. it can be risky business. and one fund has been doing it longer than anyone in the

country. the new horizons fund started 55 years ago. morning star gives it a bronze status status. the manager of the fund is henry ellen ellenbogen. he joins us for a rare interview. thanks for being here today. >> thank you for having me. >> small caps have been tricky especially lately to find out where the gains are coming in. what's going on with small caps? why do you think they're underperforming? >> you know, i just think they had such a good 2013 and growth is so scarce in the market that people put a premium on it. and it went a little bit too far. and now when we look at them we will say they're kind of fair versus the rest of the market. >> tell me a little bit about your fund in particular. why did it close back in 2013? what did you see happening at that point? >> you know, there were two things going on. one is if you look at a 55-year history of smaller companies,

you would see that on an absolute basis, they were very expensive. you know i'm talking about two standard deviations expensive. and relative to the rest of the market, they were also highly valued. the second thing was we basically saw investors really chasing returns. really driving up the highest growth companies. and even within our own fund we saw a lot of investor interest. and we just felt that it was not the best time to be taking new investments given the prices that we had to pay for small cap stocks. >> what about fast forward two years and look at today. how do things look right now? have they calmed down a bit, have earnings caught up to valuations? >> we've had a period of digestion. i would say the small cap market is fairly valued. it's certainly not what it was in 2013. so in general we're kind of

balanced on our outlook. >> let's talk about what the stocks you like. grub hub is number one. >> this a rare company. it benefits from you know just the growth of smart phones. but one of the big trends we see going on in the internet in general is people have moved on from looking for information to kind of wanting action. and when you think about ordering out food this is the company that has really become the dominant company in the space. it's a business where we think winner takes most market. the second thing we would point so is when you look at the second act that this company can have making delivery of food more efficient and some of the efforts it's making in the delivery markets, we would also say is very attractive. >> you also like allegiant air. while a lot of analysts come on and talk about the airline companies, they rarely talk about allegiant air. >> i think when people talk about airlines they talk a lot about gas prices. and this company benefits just

like everyone else if not more from $50 oil. but what's really rare about this company is that it's created a business model innovation. traditionally airlines have been a high fixed cost business. which means you have a lot of volatility in earnings. this is a business because it serves us smaller markets and has a different type of airplane, it's basically been able to create a variable cost business model. it's also very unique in the airline sector. it's run by an entrepreneur. a gentleman started the company and still owns 20% of it. we tend to like companies that are run by their founders. >> you also like guide wire. that's a company that does software for claims and insurance. >> this is a very mundane industry, insurance. essentially there's not been a new technology platform in over 20 years. this is the first company that

has cracked into it with a software product that makes the industry more efficient. the second thing we would say is really exciting about it is once you put the industry on a standard software platform then you have a really powerful second act. you can use the industry's data to help your customers make better decisions. and that not only should help your customers, but it should also make the company essentially much more valuable. >> we were just looking at a one-year stock chart. that stock took a huge tumble last spring. what happened? >> it was -- it benefitted from the excitement around cloud computing stocks in 2013. and, you know, we had a significant market correction across the whole sector. so it was not a company-specific thing. it was really caught up in the larger sector it was in. >> we want to thank you for joining us today. come back and see us again soon. >> great. thank you. up next the airline leasing

business thanks to the lower oil prices. aircastle has seen its stock jump over the last six months. the company calls itself a value investor in commercial jet airliners. we will find out what that means when "squawk box" comes right back. the real question that needs to be asked is "what is it that we can do that is impactful?" what the cloud enables is computing to empower cancer researchers. it used to take two weeks to sequence and analyze a gen with the microsoft cloud we can analyze 100 per day. whatever i can do to help compute a cure for cancer, that's what i'd like to do. you, my friend are a master of diversification. who would have thought three cheese lasagna would go with chocolate cake and ceviche? the same guy who thought that small caps and bond funds

would go with a merging markets. it's a masterpiece. thanks. clearly you are type e. you made it phil. welcome home. now what's our strategy with the fondue? diversifying your portfolio? e*trade gives you the tools and resources to get it right. are you type e*?

welcome back to "squawk box," everyone. we've been watching the futures this morning and we have seen

red arrows. the dow futures down by about 22 points after being up earlier this morning. s&p futures are down by about 3.5 points. and the nasdaq down about 1 point. the airline industry continues to fly high after a strong 2014. that is good news for aircraft leasing companies. commercial jets make up a half a trillion dollar market. 40% of that is owned by leasing companies. that number is growing at about 6% annually. joining us to talk more about that opportunity is ron wayneshal. he's with aircastle. i was surprised with those numbers. i didn't know that 40% of the market is controlled by leasing. why is it growing at 6% a year? >> the reason airlines lease is probably the same reason you might lease a car. you can't afford to pay for it up front. you want the flexibility. >> so the flexibility that comes with it how do you play off that? what do you do? >> that's the core of our

business. we are good at remarketing aircraft. when a lease is over we'll look around the world. we've got a great team to do that. we find the best use for the airport. >> what's an airline lease? is that like a standard five-year car lease? and do you get penalized if you put extra miles on it? >> not for the miles. but we do charge for the utilization, the burning up of maintenance time. maintenance is very expensive. the leases are in u.s. dollars. so we don't directly field all the currency movements in the world. >> that's interesting. we noted when boeing came out with their numbers the other day that they hadn't been impacted by foreign currency. we didn't realize to that point they were doing all of the sales in dollars too. how come leasing is in dollars? >> because of the trade in dollars. that doesn't mean our customers don't feel that. and doesn't mean that we don't work on that as an opportunity. >> what do you mean an opportunity? >> the dollar got stronger over the last several months.

you can sell an aircraft for profit, perhaps. and this is a great opportunity for us. in fact in the fourth quarter of last year, we did three three-quarters. >> in other nations they were selling these things and turning back around. what's happening with u.s. -- do u.s. carriers lease as much too? or is this done more often overseas? >> less. i think the u.s. carriers have more options in terms of financial markets, but it's part of the business as well. i say for the growing economies it's leasing has been an special part of how they've been able to get capacity. >> what do you wind up getting caught up on? jet fuel prices, how does that effect you? >> it depends on what you own. jet fuel is a good thing. your last guest talked about allegiant. they have an older set of aircraft that benefits because their capital costs are low. they're not so fuel efficient, but they're able to take that to

the bottom line. as a leasing company, it's all about the right price. we've had more of a con train value approach. we buy new aircraft but we also buy mid-age aircraft. over the last few months we've been able to get customers like southwest airlines to take on leases or extend leases of mid-age air leases. >> i notice in your most recent earnings your revenue was actually up 24% year over year. or 24% for the quarter. 16% year over year. what's happening with that? can you continue with numbers like tho ez? >> it's hard to predict the future. but we feel good where we're positioned. we did $1.8 billion of business this year. there are a lot of large leasing companies. what we try to focus on is the part of the business that has higher entry that requires a little bit more work. >> which would be? >> so situations that don't have a big auction process in terms

of a bid. so if a chinese airline wants to do a sale and lease back 30 or 40 people will show up for that auction. we're not interested in that. >> that sounds like a catch situation. >> it's the cheapest money that wins. but we did a big deal last year with the biggest airline in latin-america. it was a half billion dollar deal. >> why didn't b they do the same thing going on in china? >> because that market is a much more limited market for those airplanes. they were new wide body aircrafts. but we got a great price. we think we'll do well with that if. >> thank you for coming in. very interesting. >> thank you. up next the final trading day of the week. cramer's going to join us about what you need to watch at the opening bell when its rings this morning. anything? no. you? no. aflac! what are you guys looking for?

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97. down to the new york stock exchange where jim cramer joins now. we've been talking about you this morning, jim, and it gets interesting talking about oil. i see different nuances and if i

finally decide that demand does go up because let's say, you're right, u.s. is good rest of the world's probably recovering europe's going to get better demand improves. we changed the calculus on the ply side no reason to think all of a sudden we'll so. it up and go back to 100. it's going to take a while to reverse. >> supply in the first quarter's going to be gigantic. didn't shut it down like they thought. everybody's done what they call high grading, cut capital budgets but going after easy oil, gulf of mexico came on big, huge amount of canadian supply coming down. so having 500,000 barrels per day in the united states being added. we're not -- we're going to have more supply than we'd like. eog encapsulated a look of this saying, look there's more supply coming on we'll let a lot of the oil companies go

under, pick at the carcass and later this year perhaps it will go. but, no no short-term reason to think oil goes up unless europe turns. a million in quarter per day in the world. you need to see europe turn before you think the supply can be sopped up by demand. >> how many times do we talk about deere over the years? a lot, right. >> yes. >> it's rough for agriculture. do you buy a company when it's in a position like this or macro things out of the countries -- out of the company's control, is it just too negative to buy the stock? >> deere very affected by warren buffett's announcement that he bought more than the 10 million additional shares jumped from 88 to 92 it shouldn't have. i'm close to agco. 2015's a bad year. so i was surprised to hear people want deere. deere confirms what agco said a

bad year. deere historically conservative. when you buy the stock, down three, four five point after they are negative in the conference call, which has been their way, that's a good way to buy the stock. 2015's a bad year no doubt about it. bad year. >> jim we did have an analyst on earlier who suggested you could be in a ten-year downturn what we've seen is the peak and you could be in a long downturn cycle where people aren't renewing, aren't buying farm equipment for the next decade. >> i can't go with that. still a feed the world strategy whether talking dupont or agco or monthsantomonsanto. it's in sync with household formation in the country. no normore people to feed you need form equipment. brazil a giant black hole in the world, black hole it's killing every single farm equipment company. russia and brazil back on nice growth in 2016. >> we'll see you in six minutes.

5 1/2 minutes. see you. record cold temperatures gripping much of the country. airline delays likely. how cold is it? viewers show us next, when "squawk box" return. you can find a new frontier. there's nothing stopping you and a lot helping you. technology that's with you always. this is our promise. it's never been better to wander because wherever you go, you'll find us doing everything we can, so you can. e financial noise financial noise financial noise

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it's cold out there, we know it unless you're a lucky viewer watching from a warm caribbean island or hawaii you are talking about how cold it is today. temperatures, once again, as much as 40 degrees below zero for many areas. in kentucky last night, it was colder than antarctica. florida bracing for record lows dropping to 30s in some parts. we've been hearing from all of you on twitter. within writes it's getting warmer only negative 10 in toledo ohio. great show. thank you. sorry it's ten degrees below. a picture of his dashboard. dom chu tweets i'll add my car dashboard to the twitter feed. it may say zero but i'm told negative 20 windchill. >> how cold is it right now? trying to get it on the iphone here. three gleedegrees. was that vanilla ice. >> it was vanilla ice. just arrested for burglaring

somebody. >> really. >> says it was a big misunderstanding. he was doing -- he has a reality show. >> diy. do it yourself. >> a us hereby the house trying to fix up bikes and stuff in the house nearby ended up in his house. >> no biggie. >> i don't know the true back story. >> can explain it all. >> stop. >> if it's cold like this it's weather, andrew. >> it is weather. >> but when it's really hot in the summer that's climate change. you've got to know when to call it change and when to call it weather. anyway -- >> you should know. apparently five degrees in new york outside. >> weather. >> feels like negative 13. >> weather. weather. caused by -- >> oscars coming up on sunday. don't feel bad for the losers. they won't go home empty handed. losing nominees in the five biggest categories still get a gift bag. anyone who is a nominee gets a gift bag. worth $167,000. >> why. >> the swag bag the most expensive ever doubling last year's.

what's included? by the way they pay taxes. ly. gloss, that's cheap, lollipops, camping trip valued more than $12,000. i don't know what kind of camping trick that is. unlimited audi car rental for a year. >> if this were a public company, why? if they don't get a swag bag, they're not going to show up for nominations? why do you need -- i would say this why don't they save this? who pays for it. >> all of the companies -- >> donate. >> give it for free into the bag. they want the celebrities to go on the camping trip and tweet about it and talk about it and drive around in the audi. >> overpaid spoiled brats don't deserve 170,000 worth of -- overpaid spoil brats. >> god bless them. >> join us monday. "squawk on the street" begins right now. >> that hit home. ♪

good friday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. question of the morning, can stocks make it three straight weeks of gains? if so it's the first time this year although the premarket is tepid on retail earnings and this showdown in greece. oil with modest gains. ten-year has settled below 2.08. road map begins with the markets. is the nasdaq overvalued shooting for its eighth day of gains. instagram 33 billion valuation from